In it’s default configuration Desktop Effects are disabled for various graphics chips including Intel X3100 (GM965/GL960) which is what’s in my Lenovo T61.
There is an easy way of disabling the blacklist – locate this line in /usr/bin/compiz:
T="$T 8086:2982 8086:2992 8086:29a2 8086:2a02 8086:2a12" # intel 965
Note: Intel 965 has been removed from the blacklist in Hardy. On the other hand compiz started crashing on me after upgrading to Hardy so YMMV.
Update: (16-01-2008) After updating compiz today it no longer crashes.
Update: (08-02-2008) I have simply given up on compiz. It runs for a few minutes then crashes. I am not the only with this problem.